EVERY BASIS--> B/K, CL!!!
Liberal Construction: DTPA shall be liberally construed and applied to promote is
underlying purposes, which are to protect consumers against false, misleading, and
deceptive business practices, unconscionable actions, and breaches of warranty and to
provide efficient and economical procedures to secure such protection. [DTPA 17.44]
Proper Plaintiff: CONSUMER 17.45(4):
1. Qualified entity: individual, partnership, corporation, Tx, or Tx
subdivision/agency) (EXCEPT business <25Mil gross assets)
2. Who Seeks:
1. presents self to seller as willing buyer w/good faith (subjective) intent to purchase.
(unlike UCC- liberally construed) Holeman-car for $100, no GF b/c would was so low
that unreasonable & would accept only “reasonable offer”
2. Capacity to consummate – best way is to go buy somewhere else
3. Actual sale not nec, no consideration necessary..- Bait & Switch.; Martin v.Lou-
Phone book Ad–proof of previous ads enough to show capacity
or Acquires: 1relationship to transaction, Π was an intended NOT incidental
beneficiary- Wellborn-mom bought garage door opener partly for benefit of son.
Kennedy- company insurance policy bough for his benefit.
Incidental user (NOT CONS.): borrows goods, riding in car, fiancé
3. By Purchase or Lease:. Bargained for exchange/consideration-no actual transfer of
consideration required.- Kennedy: emp. Health ins. company made the purchase.
Continuation of repair services- OK: Melody-home repair, deferred lawsuit so could
repair. Abortion clinic, time is consideration under DTPA
Not condit.gift/gratuitous servic->Exxon- oil change sought then later got car repairs
he didn’t pay for.)
4. Any goods/services: Look @ frm subj. perspect. Of consumer to determine what he
sought, if good/services that formed basis of complaint, OK. Flenniken wanted home,
not loan.
Services: 17.45 (2) labor/work/service purchased or leased for use, including services
furnished in connection w/sale or repair of goods even w/o separate consideration.
– Banking- from consumer perspective, was a good sought or a loan? Flenniken-
sought home, builder provided loan, that’s OK..
Riverside- all sought was $ to pay off loan, not car. Walter-complaint about $
not hotel.
Goods: 17.45(1)-tangible chattle & real property,rea, oil/minerals (unlike UCC
movable & tangible),
– % interest in a good by partnership-Hennesseey- cattle.
NOT: no intrinsic value- securities- Youngblood; lottery tkt- just right to participate;
stock, prtnrshp int/$/accounts/deposit certif..
Affirmative Defense: Π not consumer
Business Consumer (Indiv. Prtnrshp, corp. for bus purp.): ∆ Aff. Def., BoP to
show Π not consumer otherwise assumed (Eckman). Sophisticated parties. Look @
Gross Assets 1 & use of goods. Bus. consumer w/ 25million or more assets
2
Controlled/subsidiary of corp w/25mil
17.42c-DTPA Waiver: valid only if 1written/signed by con. 2conspicuous
lang.3represented by legal counsel-not relate to ∆ 4no significantly unequal bargaining
pos—arms length transact. Attny gen can always bring suit!
17.49 Exemption
a. NewspaperMedia-owner/employee coming from other sources EXCEPT if act is
knowingly OR for own substantial financial benefit
b. FTC: if approved FTC action, it is exempt
c Professional service: exempt if advice, judgment, opinion, prof. skill form essence
of transact: “in my opinion”- Head- inspectors opinion.
Exemption DON’T apply if: not advice, judgment, opinion
1. Express misrep. of material fact – Sorokolit- could sue Dr. for LL don’t
allege b/soc, otherwise MLRA will preempt DTPA.
2. Failure to disclose information=LL 24
3. Unconscionable act - Lantam v. Castillo- could still sue the atty
4. Breach express warranty not characterized as advice, opinion, or judgment
d. Entity Vicariously liable for prof. service 21.
knowingly committed act or if brought under a tie in statute 22.
e. Cause Of Act.- Bodily injury/death/mental anguish Except- mental anguish if ∆
f. 100,000-500,000: 1 Transact, project or set of trans relate to same proj for over
100,000 consideration by consumer, C rep. by legal counsel- of no relation to ∆.,
Written K, not C’s residence.
g. Total consid. Over 500,000, - other than residence (does it need to be primary??)
F/G- look @ promised consideration not what actually pay;
if over 500,000 then divide up pts to diff. entities to avoid exemption
Proper DEFENDANT: anyone who violates the DTPA, related to consumer based
on the purchase/lease transaction. Goods/services purchased form the basis of the
consumer’s complaint
Employer/agent & company (can indemnify)- consumer can sue anyone!
-->Keyser- could sue agent & company for misrep of easement/oversized land
Remote Party/manufact: Only if violation in connection with con transact- don’t
want to hold liable for entering stream of commerce =. Amstad v. US Brass: 1. rep
only to builders-not intended nor reached consumers 2. Manufact. Not present at the
sale 3. Builder mde an indep. evaluation.
Assignment of Claims/Warranty: NO-warranty can’t assign b/c DTPA provides
procedure & UCC substance. B/C DTPA wants to help consumers & not create a mkt
for these claims. PPG v. JMB
CL- allows for assignment of warranty (sue outside dtpa)
CLASS ACTIONS: no fail safe class (subj. criteria), must defined by objective
criteria (Intratex Gas Co. –natural gas-defining the class rested on determining
liability)
Must meet all 4: TX rule 42a
Adequacy: member repress. the entire class
Commonality – q of law/fact
Typicality - typical claims/def. of the class
Numerosity - so numerous joinder impracticable
And one of
1. indiv. prosecution create risk of inconsistent adjudications, or impair ability to
protect their interests
2. party opposing the class acted or refused to act on grounds generally applicable to
the class
3. Common issues predominate Southwestern Refining Co v. Bernal: individual issues
predominate in personal injury case must prove reliance or unconsionability for
individuals
1. LAUNDRY LIST VIOLATION:
UCC: no merchant requirement like UCC
Use or employment by any person of a false, misleading, or deceptive act or practice
that is: In the laundry list &Relied on by a consumer to the consumers’ detriment
and is the producing cause: cause when in a natural sequence produced an occurrence- does
not have to be significant (of eco/mental ang. damages)
• Most Need NOT prove intent/knowledge, diff from CL fraud- Pennington: didn’t knw boat
def. when sold except 9,10,13,17,24
• Puffery vs. Statement of Fact: F: seller statement of something buyer ignorant of. P: 1.
seller opinion/personal belief 2. based on general info known to consumer & on subject
w/no superior knowledge of.
• NO: “in my opinion”, bad car, none found, Artistic words “next blockbuster”, “best little
bldg in Austin”- Prudential; “bed & breakfast fixed up”-Larsen
LIST:- exclusive
1.Pass off goods/services as another
2.misrep source, sponsorship, approval, certification of gds/srvs
3.“” as to affiliation, connection, assoc., w/ or certification of another
4.geographic origin
5.Representing gds/srvs have CHARACTERISTICS, which do no have or person has
sponsorship they don’t have- ___ made misrep when said it was __ when really __.
Pennington- boat good; Mechanic- completely fixed. Garrett-misrepresented insurance
coverage- no bad titles; Gunn Buick: lied about rebate; Weitzel- hse complied w/hsing code
6.original/new goods
7.Represent goods of particular QUALITY: excellent, perfect; completely fixed
a.Smith v. Baldwin: builder misrep house quality
8.Disparaging gds/svs, bus., of another by false/mislead. Rep of
facts
9.Advert w/intent not to sell as advertised
10.“with intent”not to supply reasble/expectable public demand
11.False/misleading statmets of fact concerning price reductions
12.Rep. as covering rts, remedies, oblig. Which it does
not/prohibited by law
13.Knowingly make false/mislead statements concern need for
parts/ replacement/repair
14.Misrep the authority of person to negotiate the final terms of –
consum. Transact
– NO warranty for professional svces (17.49(C)) Murphy- accountant/ Allision-
16. Reducing miles shown on odometer
17. Fraudulently advert that going out of business
20. Represent. Guaranty/warrantee confers rts/remedies it doesn’t have
Promotional pyramid scheme
Rep work performed when NOT performed
24. Deceptive SILENCE :1. D knew of info. 2. nondisclosure intended to induce before
transact took place. 4. Reliance- C wouldn’t have entered into transact if it had been disclosed.
Head: failed to disclose after; lawyer no work done AS IS doesn’t get rid of this
2. UNCONSIONABILTY
UCC: Procedure: absence of meaningful choice. Substantive: unreasonably favors on party.
Defense only
DTPA: 17.45(5) COA. +LL 5&7 (SUBSTANTIVE UNCONSCION. NOT VALID)
1. act taking adv. of consumer’s lack of knowledge, ability, experience, or capacity of
consumer
2. to a grossly unfair degree: objective std -glaringly noticeable unfairness
YES: Bennett v. Bailey: dance lessons; Lantham- attny misrepresented he was filing the suit.
Kennemore: fix hse, excluded other builders, didn’t personally oversee work
NOT: Head: b/c legal rep., had multiple inspections & choice.
ASSIGNEE LIABILITY: derivative liability is prohibited- C suing someone who did
nothing wrong. Holder in Due Course of a negotiable instrument (loan) liable only to extent
of monies actually paid on the note. FTC requires notice to assignee that Holder is subject to
all claims and defenses as the original holder up to a maximum of money paid.
Hme Sav. v. Guerra: suit capped @ amount paid for installed siding but not for direct
deceit b/c assignee was innocent. Quantel: innocent involvement in transaction, couldn’t
sue, no “inextricably intertwined” theory of DTPA liability.
3. WARRANTIES: 17.50(a)(2) DTPA= Procedure/vehicle; UCC/ CL=Substance
Breach of K: not actionable under DTPA. breach implied/express promise to perform-
nonperformance. Smith v. Baldwin- B/k b/c never built house. UCC- no performance is not
b/w- UCC- only b/w once delivered or part performance is rendered
La Sara :bank require 2 signatures, just implied term of the contract, not unconscionable.
Brooks- Insurance co. promised to defend against suit, b/k when it failed to do so
Breach of Warranty: subset of breach of K- defective performance Southwestern Bell-
promised to put in 2 ads, only put in 1. Contra Brooks, that part performance is only b/k
when failure is of perform. Of coven Head- promised licensed inspector but provided novice
instead.
GOODS:UCC- substance
Warranty of Title: UCC 2-312: seller has good title of thing selling. For anything sold.
Waiver/disclaimed if specific language
27.004(e) Π rejects rsble offer/doesn’t allow to inspect/repair prsant to acptd setlmnt: limits
Sue under UCC- for Express/implied b/c no requirement of in connection with
recovery
Express Warranty 2-313: Basis of the Bargain
A. Seller makes Affirmation of fact/promise, pt of basis of bargain (tell before deal), no
puffery- Southwestern Bell- two ads, but only put in 1. Faulty, this WAS the bargain
Head- promised licensed inspector provided novice.
B. Description of goods pt of basis of bargain (brochure) Hobbs: Spare tire stcker, Al.
Case, but stands for prop. That a mfg who advertises to consumer is liable.
C. Any Model/Sample, Industri Chem intended sample to be used to sell
Remote manufact: in connect w/transaction & consumer gives notice to the seller or the mfg
DTPA liability is proper. Industri-Chem: when sample provided for purpose of sale, no
privity required, Hobbs spare time sticker
Disclaim:316 No Disclaim- PER doesn’t prevent evidence of fraud
Implied Warranties: cannot sue remote manufact (can sue for b/k-UCC though).
DisclaimAS IS- disclaims ALL Implied warranties
Merchantability: 1. Merchant seller deals in goods of kind
2.Merchantable good pass w/o object in trade, fit for ordinary purpose, adequately
packaged
3.Defect: Π show by circumstantial evidence used properly & no alteration (same as
when left seller). Plas-Tex: needed proof of pool defect.
Disclaim:2-316(2) yes if say “merchantability” & in conspicuous writing
Fitness for particular purpose: any seller who knows of buyer’s purpose & buyer
relies on seller’s skill/judgment to make purchase. Willoughby-herbicide, couldn’t
disclaim b/c buyer didn’t see the disclaimer
Disclaim: 2-316(2):in writing, conspicuous language- no warranties.
COMMON LAW: Real Estate
Express warrantysee goods
Implied warranties:
Habitability: last for reasonable time. structure must be very defective; Tenant pay
dependent on landlord performance. 2nd buyer sue builder under K law only not DTPA, &
can’t sue seller. Gupta. Humber: fireplace.
Waive: Centex Homes rules, but is conflicting. Says this can only be waived when byr is
bying problem house and knows of prblms mkng it uninhabitable. But goes on to say war.
Only applies to latent defects, not any that buyer knows about. This is impossible.
Good Workmanship: Conduct, gap filler. New home only- builder only, rsnble time
Can Waive if specify performance level Centex. Humber: construct. Fireplace
Suitability in Commercial Leaseholds: tenants pay is dependent on landlords performance
of providing a suitable building. Suitable for intended com. purposes- no latent defects &
essential facilities remain suitable. Davidow: not suitable for Drs office
Proof of breach: nature, tenants effects, length of defect, age of bldg, rent, area, abnrml use
by tenant Can Waive: “As Is” GYM-N-I-cl prevented claim. And if Lease assigns certain
repairs to renter, the lease preempts.
SERVICES
Good & workmanlike performance: Show Compelling need- other remedies not
adeq. Guarantee quality of work by one w/knowledge, training, experience necessary
for successful practice in trade/occupation & performed in manner generally
proficient. -
– Repair & modification of tangible good/property- actual, not incidental pt of
service is warranted. Rockymountain-spill refueling was an incidental service.
Melody homes= repair was continuation of transact. Archibald-defective training of
horse
Gap Filler, Cannot be waived
psychiatrist= negligence or b/k claim
Express: Promises concerning manner/attributes of performance UCC 2-713/712-
b/w ONLY when gds delivered/performance is defective.
not just promise to perf (b/k) or nonperformance (b/k)
Brooks- I will defend against suit, but did not, No DTPA Southwestern Bell- put in
2 ads, only put in 1. YES DTPA. Head- licensed inspector but novice instead. YES.
DEFENSES
Didn’t do it; no reliance (17.50(a)(1)); D exempt (17.505); Waived (17.42); Settle offer
(17.505); full settle (17.506); Consumer death- can still bring
Statutory:
Mediation (17.501)-either side can compel mediation early, compelling party must pay if
Π ’s damages less than 15k. hold w/in 30 days of the request
Consumer death: generally it does not prevent bringing the action
17.565 Statute of limitations- DTPA: 2 yrs-false,misleading,dec (Warranty4 years)
- May extended 180 days if ∆ knowingly induced Π to refrain/postpone bringing action
- Discovery Rule: statutes runs from time consumer discovered or w/ exerc. Of reason.
Diligence should have discovered. Focus is typically on the injury and knowing it resulted
from something bad. Don’t NTK who, extent, or legal theory.
74.004 of Civil Practice & remedy code: NO DTPA COA for damages for personal
injury or death for Medical acts resulting from negligence. Sorokolit, MD v. Rhodes:
- CAN bring claims for -->misrep or br/w-
- No pharmacists claims
801.507: Texas Occupations Code: can't sue veterinarian for malpractice/ neg.
u/DTPA
RCLA: (always try to apply CL fraud & if time DTPA too)
•Pre-empts DTPA when conflicts- Sanders- proximate cause- foreseeable not
producing (lesser std) from dtpa, and only allows actual damages
•Does NOT limit equitable remedies-Perry Homes v. Alwattari- rescind K
• Does NOT apply to PI, Property damage, wrongful death, or CL fraud
•Must be related to construction defect-(not imperfect performance/abandonment).
•Who: person who did the work ONLY
•Notice: failure =abatement
(a.)Pre-filing notice- 60 days before file π has 35 days after notice to make
written req to inspect and
(b) Settlement: ∆ 45 days to offer settlement2nd settlement w/in 10 days after
Π ’s reject of first (offer may be to pay, make repairs, or arrange 3d party to
repair)
(1)Π accept w/in 25 days OR reject (written explanation of why offer is
unreasonable)
Repairs: must be completed w/in 45 days after writn acceptance
– Not EXCESS of: (1) fair mkt value of ∆ s last setlment offer OR (2) amt of rsmble
settlement/purchase offer
– Res & nec. attny fees incurred prior to rejection
Mediation: if dam <7,500 may compel & share costs
Damages: 27.004(g): only these- limits DTPA
Repairs: K can offer or arrange for 3d party to repair
Eco: proximately caused only for:
Rsnbl & Nec (1) cost to cure defect- ∆ offer patch, resists Π ’s Cadillac job. Nd proper
experts give what was promised
(2) rplacment/repair of dmged gds @ residence (3) engineering/consult fee
(4) temp hsing during repair-comparable, homeowner testify
(5)stigma dmges-reduct in current mkt value after repair if defect is a structural failure.
Testify-homeowner/appraiser/reltor- as-normal, repaired, is
(6) res & nec attny fees.
NOT: mving/strage, boarding pets; loss income frm home bus. during temp hsing, no
mental anguish
Buy-Back prov 27.0042: conditional. Sale to blder. In the K!
–@ original purchase price + res/nec. attny + transfer title cost + $ for perm.
Improvements + reasonable cost to move
–Liquidated dam cls: BUT unlike UCC 2-718, will still enforce even if unconscionably
low/punitive
Common law:
NOT defense.:
1
sub. perform: Baldwin–Sub. Performance not a defense
2
PER: oral rep ARE admis. & can serve as DTPA basis, can use for K suit-Weitzel v.
Barnes: misrep made after K-wrng use!
4
Constructive knowledge not a defense-Ojeda de Toca defect in prop. records.
After take possession: Kennemore: moved into hse, acceptance not a defense
Valid Defenses
Duty to mitigate- Gunn Infinity – can’t just not go to work b/c no car
SoF: only a defense where doctor’s representation is in question and MLRA applies
Liability Disclaimer- risk shift device NOT DTPA waiver (17.42) just no basis for
assert rts & negates producing cause
- As Is: Prudential ins. Co. clause defeats DTPA claim absent fraud in the inducement.
Unless buyer is entitled to make inspection but is prevented by seller.
- As Is Plus: As-is + no reliance, puts burden of inspection entirely on buyer’s
inspection
- As Is Plus Plus: as is +no reliance +to end dispute +legal counsel.
Schlumberger Tech: diamond inst, dispute over value, legal counsel, sophisticated
Defenses to As-Is
1. fraudulent inducement: CL-Knowingly (diff. frm dtpa): a. Material misrep. b.false
c.Spkr knew false/reckless w/o know of truth & as + assert d. Mde w/intent party act
upon e. Reliance f. Injury. (concealment/inspect refused) NOT: puffery
2. Totality of Circum: OK: Larsen: equal bargain pos, no counsel, realtor, clear terms,
no rely. NOT Ok: Oakwood-boiler plate, not equal pos-low edu, relied on fixing things
Arbitration
- FAA applies to contracts evidencing interstate commerce transaction; trumps State law
that conflicts- Jack Anglin- trumped dtpa claims
- Disputed Arb cl: Ct: (1) judge summarily determine FAA applic. (2) evident. hearing
of dispute facts. Enforce UNLESS can revoke under legal & equitable rules of the
STATE.
Severable – Buckeye: question of whether K w/arb clause is legal belongs to arbiter
Non-signatory: Tx rules Law/equity. Seek/derive benefits/sue based on K. (company-
employee). In Re Weekley Homes: persnl injury home
Arb DeFenSE:
(1)CL Unconscionability: grossly unfair degree. Pine Ridge: one-sided, buyer only pay
fees; buyer b/k seller got liq. dmg but Buyer had to go to arb., pre-printed, non-
negotiable
(2) $ Paid for Arb: NO: Green Tree: risk of costs not enough, need proof. YES: Olshan:
large % of Π income, 3.5 times dam, effectively preclude bringing of claim.
Judgement vacate: FAA:
1. procured by corrupt, fraud, undue means
2. Evident partiality: not trivial relationship/Qable dispos. Falbaum: wrking for assoc
not enough, argued case against other homeowners. Perry v. Hull: rep homeowner in
sim. Case, didn’t w/hold evid.
3. Arb misconduct: no postpone even w/suff. cause,ref’d to hear evid, behave
w/prejudice
4. Exceed pwer or so imperfectly execute duties that mutual, final, and definite award
upon the subject matter submitted was not made.
Not basis- manifest disregard for law & No contract of alternative- Bacon
Disclaimers & Lim. Of Damages:
Merger Doctrine: doesn’t seem to apply. Alvarado:
Warranty Recovery-can limit- applies to both economic/mental anguish- but still treble
limit: Rinehart: xpres warranty limited but properly trebled.
Forum Selection : considered prima facie valid & enforceable. WON’t enforce if:
unfair, unreasonable, or against public policy. Doesn’t waive DTPA (not clear if choice
of law will bar DTPA).
Fundamental Fairness:
Notice, Time, Rejection: Fairness- adequate notice w/in time to give C a option to
reject/negotiate, not included simply to discourage legit claims
Invalid: Shobaugh: Cruise- on tkt, got notice after entered into agreement; couldn’t get
out w/o paying
Valid: Shute/Effron: knew of cl before & w/in time could get out of it.
REMEDIES
Pre-Suit Notice: 17.505:- must have actual notice
(a) Written rec’d @ least 60days before Π files suit-
1. advise person in reasonable detail of the consumers complaint;
2. damages-eco, mental, attny fee, if any, reasonably incurred in asserting the claim
Sufficent: Richardson v. Foster 6pg/claim/dmgs to settle. Not: 1pg, claims only-
3. ∆ may request inspect
(b) Exceptions: if 60 days impracticable to prevent expiration off SoL. Or if
counterclaim
(c) No notice to ∆ : (a) ∆ may file plea in abatement no later than 30 days after file of
the original answer if he does not he waives his objection (b) Ct-abate the suit- 11th day
after file, grant time for notice, still fail then dismissal- Richardson.
(d) Sanction outside dtpa Rule 13 Tx Civ. Pro if suit is groundless and brought in bad
faith, or for the purpose of harassment.
Settlement: Csmer-1st, offer higher than want, ∆ offer lower b/c get 2nd chance
Offers: (a) send btw date notice received & 60 days (Π ’s notice contains Π ’s offer).
 (b)if no mediation, after ∆ answers 90 days to make 2nd offer
(c) Mediation- 20 days after end.
(d) Offer MUST Include: separate: 1. Cash value for claim & Rsnbl & nec. attny fees.
Rejection (e) Π reject if no accept w/in 30days (f) file Aff. Certify reject
After Trial: limit
(g) Damages: same as, sub same as or more than trier of fact consumer CAN’t recover
in EXCESS of lesser of (1) amt in offer OR (2) amt by tier of fact
(g) Attny fees—Before date/time of rejected settlement offer. If offer sub same as or
more then can’t get fees GREATER than amount in settlement offer
∆ may use rule 42 when on hook for settlement claims
Damage Calculation: Π entitled to measure giving most damages- APPLY ALL
Cumulative Recovery:
- Woo (consid paid-profits)
One Satisfaction Rule:
If same injury--you have to elect from the outset what act to pursue under the statute
One actseparate injuries1 actual damage
Separate actssingle injury 1 actual dam + multiple punitive for the separate acts
Bliskey: change lock on door- negligence & dtpa unconscionability-got multiple punitive
Mayo: got damages for separate acts-dtpa & penalty
Separate acts  separate injuries  multiple recoveries & penalties are permitted
MKT Value: Buyer’s opinion ok, but must be opinion of market val, not personl
opinion
○ NO: McGalliard: “wouldn’t pay a penny, worth nothing”;
METHODS
Mercedes v. Dickenson: not explicit enough.
1. Benefit of Bargain: diff btw value promised/warrant @time/place of accept- value
received. (Good deal-higher than K price)
2. Out of Pocket: diff btw consideration Π gave – value recived (value rvedsubj. view
of Π ) (Bad deal)
3. Cost of Repairs: amt put in condit promised. Easiest, fully cmpesate. Limit: eco
waste- cost repair sub. out of line w/diff in value. (rsonable & nec. repairs)
Economic Dmges: compens dam. For pecuniary loss (care, maintenance, support,
srves, advice, counsel- medical bills/costs). Does not include- exemplary damages,
physical pain/mental anguish, loss of consortium, disfigurement, physical impairment,
loss of companionship/society
– NO Mental Dam. Arising from purely eco loss (not foreseeable & eco = Π whole)
AMOUNT
17.50(b): Eco damages (unless Tie-In or prove Culp)- get mental even if no eco.
Treble: must have net recovery for treble (treble ONLY the net)
b. Knowingly: Mental ang. + Eco + MAY get 2x Eco
awareness of flsity/decept/unfair of practice giving rise to claim, infer from obj. manifest.
To determine if D acted w/actual awareness
Not nec. from outset: Jim Walter Hme: time of contruction
c. Intentionally: Mental ang +Eco + MAY 2x Eco & 2x Mental ang. Chapa: wrong- eco due a creditor.
+mental + 3x eco
actual awrenes of flsity/decept/unfair of practices giving rise to claim, coupled w/specific debt collection & includes a person who sells/offers to sell forms represented to be a
intent that consumer act in detrimental reliance on false/decep/detrimental ignorance
Consequential Damages: (in addition to eco. dam)
• Loss of use: need not show amount expended, only shw what cost would have been- Proxy
to value of loss of use: Luna- entitled for damages for CAR rental even though never
rented a car
• OthersLost profits, dam to other prop, cost to remedy defect, lost earning, credit dam,
loss/use of home, dam incurred in mitigagion
Mental Anguish: requires knowing Don’t need ECO damages to get mental anguish.
Lantham-legal malpractice
○ Need direct evidence of nature, duration, severity of men. anguish- establish
substantial disrupt of π’s daily routine or high degree of mental pain/distress that is
more than worry, anxiety, vexation, embarrassment, or anger.
○ OR- requirement of physical manifestation
○ YES: heart broken/physically ill/devastated (Lantham); terrified, blow brains, no go
on (Whyloma).
○ NO: mere emo.- hot,unpleasant, disapp. (Parkway); loss of income, med bills, worried (6… to file a charge, complaint, or criminal action against a debtor when not violated a
a lot (Saenz)
Equitable Remedies: DTPA provides for equitable remedies including injunctive relief,
recission & restitution as well as “any other relif which the court deems proper
Punitive damagesStill available
Tie-In Statutes (17.50(h)): actual damages instead of economic + mental as u/DTPA
Under current law, person must be Consumer per DTPA reqs, but this defeats purpose of
Tie-in statute. Probably wrong
Violate substantive law then Damage under DTPA. Could get mental anguish: Digangi:
Health Spa Act- no dam. For bodily injury so couldn’t bring under DTPA based on “clear
language” Digangi (this is probably wrong and due to misapprehension of law)
Actual Damages (17.50(b): damages recoverable at common law- compensation as well
as mental anguish & pain and suffering
Attorney Fees – 17.50(d)-each consumer who prevails shall be awarded court costs &
reasonable & necessary attorney fees.
Ct determination: Attny is expert- testifies to rate & # of hrs in connect w/similar charges
from other attny
Limited: amount in settlement offer if actual award is substantially the same as offer
Mandatory if Π wins (Net $ recovery not required- McKindly v. Drozd)
Reasonable & necessary Factors:
(1)Time & labor required, novelty & difficulty of the Qs involved & skill reqrd to
perform legal serv properly
(2) Likelihood acceptance of employment will preclude other employment (3) Fee
custom charged in the locality for sim. legal srves(4) amount involved & results obtained
(5) Time limitat. imposed by client or by circum. (6) Nature & length of prof. relationsip
w/client
(7) Experience, reputation, & ability of lawyer(s) performing srvcs (8) *whether fee is
fixed or contingent on results obtained or uncertainty of collection before legal services
rendered
Federal CtsUse Lodestar Method: (# of hours * hourly rate); decide how many of
those hours are reasonable; adjust hours up/down depending on factors such as how
successful you were as compared to what you initially asked for
Contingency Fee Ks:
(1) Π must prove amt is res & nec. to prosecute case @bar (don’t want ∆ paying for
attny’s other losing cases)
(2) awrd fee in specific dollar amount., no %. (forces ∆ to pay for other losing cases).
Arthur Anderson v. Perry: % only not ok
Segregate Claims: must segregate DTPA claims for which you can recover attny fees &
non dtpa recoverable fees where can’t get attny fees Tony Gullo v. Chapa: negligence &
dtpa claims. Keeton: walmart claim
17.50 (c): ∆ ’s Attny Fees- EVEN if ∆ is liablegets fees if judge finds action was:
look @ Π ’s purpose – rich so don’t need the small award
• Groundless: having no basis in law/fact & no good faith OR
○ employs the following practices:
Can look @ Evidence even if it is not legally inadmissible/defective to prove Π ’s (a)(1) using Name other than: true business/personal/name on credit card
intention
○ Finding of malice, ill will, spite, reckless disregard
○ Good faith: honesty in fact in the conduct or transaction concerned
○ No evidence for Π ’s case does NOT mean the groundless, no basis only-
Downwerth v. Preston
○ Expressly agreed to limit liability, harassment so bringing suit was groundless-
Zacks v. Parks
• Brought in bad faith OR Purpose of Harassment
○ Improper motive: malice, ill will, reckless- ONLY motive (if you win money,
can’t be sole motive)
Debt Collection
Other Option: Common Law Tort Tort wrongful
collect/IIED/defamation/Fraud*/ invas. Privacy.
SoL: Shorty v. Capital 1.
Default B/c: Anyone can sue- unlike TDCA. Duty v. General Finance Corp:
could sue under CL even though not under debt collection for inability to work, lost
sleep/weight/job.
Texas Debt Collection Act: 392.001- Tie IN Statute
Scope: a PERSON (not consumer like dtpa)-
(1) Consumer: individual that has consumer debt
(2) Consumer debt: obligation, or alleged obligation, primarily for personal, family, or
household purposes and arising from a alleged transaction.- not just $- SEE FDCPA
– Determine @ TIME the loan is taken out. Miller v. McCalla: house from
personal-->business use (was a consumer)
(5)-Debt collection: an action in collecting consumer debts that are due or alleged to be
(6) Debt collector (more expansive than Fed) person who directly/ indirectly engages in
collection system, device, or scheme intended to be used to collect consumer debts.
(Even if own debt) 3rd party collector- continuation of the transaction- DTPA
Kain v. Eisentein: Dr collecting own debt in TX still debt collector.
(7) “Third-party debt collector” a debt collector, but does not include attorney
collecting on behalf of and in the name of a client unless the attorney has non-attorney
employees who:
(A) are regularly engaged to solicit debts for collection; or
(B) regularly makes contact w/ debtors for purpose of collection/debts
Prohibtions- 1. TDCA 2. DTPA tie in 3.DTPA 3. Remedies for each
§ 392.301. Threats or Coercion. Generalizing is ok (a) In debt collection, a debt
collector may not use threats, coercion, or attempts to coerce that employ any of the
following practices: exclusive:
(1) Using/threatening to use violence/criminal means to harm to a person or property;
(2) Accusing falsely/threatening to accuse falsely a person of fraud/crime
(3) threatening/actually representing to 3rd party consumer is wilfully refusing to pay a
non-disputed consumer debt when debt is in dispute & consumer has notified in writing
collector of the dispute
(4) Threatening to sell or assign to another the obligation of the consumer & falsely rep.
that doing so would cause the consumer would lose a defense to the debt/ be subject to
illegal collection attempts
(5) … arrest for nonpayment of a consumer debt w/o ct proceeding
criminal law.
- Brown v. Oaklawn: debt collector can’t be the judge of who has violated a
criminal law, phrasing as “if you have committed …. Then you may be…”
(7) … nonpayment of a consumer debt will result in the seizure, repossession, or sale of
the person’s property w/o proper court proceedings; or
(8) … to take an action prohibited by law.
(b) Debtor NOT prevented from:
(1) informing a debtor the debtor may be arrested after proper court
proceedings if the debtor has violated a criminal law of this state;
(2) threatening to institute civil lawsuits or other judicial proceedings to
collect a consumer debt; or
(3) exercising/threatening to exercise a statutory or contractual right of seizure,
repossession, or sale that does not require court proceedings.
§ 392.302. Harassment; Abuse: a debt collector may not oppress, harass, or abuse a
person by: INTENTIONALLY: exclusive list
(1) using profane or obscene language or lang. intended to abuse unreasonably
(2) placing telephone calls without disclosing the name of the individ. making the call
& with the intent to annoy, harass, or threaten a person;
(3) long distance telephone toll, telegram fee, or other charge by a medium of
communication w/o 1st disclosing name
(4) telephone to ring repeatedly or continuously, or making repeated or continuous
telephone calls, with the intent to harass a person. Bingham- after hang up
§ 392.303. Unfair or Unconscionable Means. (a) may not use unfair or
unconscionable means that employ the following practices:
(1) seeking or obtaining a written statement or acknowledgment in any form wrongly
specifying a consumer’s obligation is one incurred for necessaries of life
(2) collect interest or a charge, fee, or expense incidental to the obligation when it is
NOT expressly authorized by the agreement creating the obligation or legally
chargeable
(3) collecting/attempting to collect an obligation under a check, draft, debit payment,
or credit card payment, if:
(A) the check or draft dishonored or debit/credit card payment refused b/c payment
was not made by a person authorized to use the acct
(B) the debt collector has received written notice from authorized person that use
was unauthorized; and
(C) the person authorized to use the acct has filed a report concerning the
unauthorized use and given debt collector w/ a copy of the report.
(b)) Creditor may charge a reasonable reinstatement fee as consideration for renewal of a
real property loan or contract of sale, after default, if the additional fee is included in a
written contract executed at the time of renewal.
(c) Debt collector NOT prevented from collecting an obligation has credible evidence,
including a document, video recording, or witness statement, that the report filed with a
law enforcement agency, is fraudulent payment actually was authorized.
392.304: May not use a fraudulent, deceptive or misleading, representation that
(3) misrepresent that Collector has info/value for the consumer so as to solicit info
(4) Must clearly disclose name of debt collector/party to whom debt is owed
(5) Validation/Mini Miranda: ONLY 3rd Party debt collector- ORAL/Written
MUST disclose:
(A) the com is an attempt to collect a debt and any info obtained will be used for
that purpose (oral or written) OR
(B) subsequent written/oral communication- the communication is from a debt
collector
(6)Written communication fails to disclose clear the nam/address/phone #
(7) Written Com. demands a response to place other than above
(8) misrepresenting the character, extent, or amount of a consumer debt, or misrep
debt’s status in a judicial or gov’t proceeding;
(9) state-gov’t-ct- falsely related to OR writtin com. falsely authorized/approved by;
using a seal, insignia, or design that simulates governmental agency;
(12) rep. debt may be increased by additional charges not authorized-atty’s fees,
investigation fees, service fees
(13) representing debt definitely be increased by the addition of attorney’s fees,
investigation fees, service fees, or other charges if the award of the fees or charges is
subject to judicial discretion;
(14) representing falsely the status or nature of the services rendered by the debt
collector or the debt collector’s business;
(15) written com. violates the US postal laws and regulations;
(16) communication is from attny/law firm when it is not (17) being collected by an
attny(18) 3rd party debt collector when is really person to whom debt is owed
(19) using any other false representation or deceptive means to collect a debt/obtain
info
§ 392.305. Deceptive Use of Credit Bureau Name. A person may not use “credit
bureau,” “retail merchants,” or “retail merchants association” in the person’s business or
trade name unless:
(1) person is engaged in gathering, recording, and disseminating information, relating to
the creditworthiness of persons
(2) the person is a nonprofit retail trade association that: (A) consists of individual
members; (B) qualifies as a bona fide business league accd to IRS; and (C) does not
engage in the business of debt collection or credit reporting.
§ 392.306. Use of Independent Debt Collector. A creditor may not use an
independent debt collector if the creditor has actual knowledge that the independent debt
collector repeatedly or continuously engages prohibited acts
Criminal Penalty: $100-$500 per violation
Civil Remedies: a. 1. Injunctive relief 2. Actual damages – eco/mental ang. &
b.. Rsnble Attny fees if successful. 4. Brought in Bad faith/HarrassmentΠ pay’s
∆ ’s attny fees 4. Attny gen. bring action . @ least $100 per violation. No punitive if
just bring under DTPA
tie in- 3x if knowingly
Federal- Fair Debt Collections Practices Act: Does not pre-empt state acts if the state
act provides greater protection. Romea: trumped NY law- wait 30 days
Scope: A person may sue for –
1692(3)Consumer: natural person obligated/allegedly obl. To pay debt (includes
spouse, (parent if minor), guardian, executor, admin.
1692(a)(5)Debt: any obligation or alleged obligation of a consumer to pay $ arising out
of a transaction (flexible meaning) in which the money, property, insurance, or services
which are the subject of the transaction are primarily for personal, family, or
household purposes, whether or not obligation reduced to judgment. - NARROWER
than TX
Transaction: following offer or extension of credit (acquire something + deferred
payment) OR involves consent/contract- agree to take a credit. Need no formal
document
Ok : Bass: bad/dishonored check; Romea: back rent from lease. Wilson- foreclosure
Not ok: Zimmerman v. HBO: theft- not extension of credit –tort/crim claim; Child
support- no consent; shoplifting- no K/consent; fake $
1692(a)(6) Debt collector: Π BoP ____hired them to collect debt
3rd Party Debt Collector only: collecting debt due to another directly /indirectly
1. Principle purpose of business is debt collection OR
– % of revenue/volume
1. Regularly involved in collection: case by case
a. # communication, frequency, personnel assigned, contractors, ongoing client
relationships, publicized
b. Goldstein v. Hutton: about 10 notices/month-spread out over a year; system in
place to create letters, client relationship
c. Romine: Western Union: frequency & highly publicized service. Indirectly b/c
getting/forwarding phone #s.
d. Lawyers- who regularly attempt to collect debts on behalf of their clients:
Heintz v. Jenkins: attny in litigation
e. Fiduciary: exception exists for duties incidental to the discharge of a fiduciary
duty. Debt collection by attorney is essential not incidental (incidental-
exempted (one of many things involved)). Wilson: deed of trustmade
foreclosure collection essential
Exception:
Excludes officer/employee of creditor who collects debts in the name of the
creditor. Officer of US. Romea- Process server exempt, indirectly
Common ownership- limited partnership, affiliation:
Kain v. Eisenstein: Dr. collecting own debt isn’t debt collector
Letter from Lawyer: must have substantial attorney involvement to send a letter
from an attorney. Need independent professional judgment w/record generated
Not enough: Heintz v. Jenkins: automated data sent to attny, send out 55,000 a
month
Prohibition
§ 1692g. Validation of debts & Mini- Miranda MUST INCLUDE
(a) Notice of debt; contents: w/in 5 days of initial communication w/consumer
regarding debt, the collector shall (if not w/in original communication or consumer has
paid) send the consumer a written notice containing—
ORAL & Written: (1) debt amount; (2) name of creditor to whom debt is owed;
(3) a statement that unless the consumer, within 30 days after receipt, disputes the
validity/portion of the debt, the debt will be assumed to be valid
Standard to Judge NOTICE
Unsophisticated Debtor: Objective standard: assume debtor is uninformed, naïve
or trusting &/or of below average sophistication or intelligence- doesn't matter
about actual status/type of transaction (smarter/dumber).
Least Sophisticated Debtor: not dramatically different, just a little less transactional
knowledge
Overshadowed
Content: contradicts 30 day allowance
Fail: Swanson: 10 days until credit harmed; Thomas: extra large type 3 days to pay;
make payment immediately. URGENT & assigned to debt collection agency for
immediate collection
Ok:-Jenkins v. Union Corp: never demanded. Grace period about to expire, ok, just
reinforced 30 days. 2 ways to get out of situation: pay us or we will sue you - just
alerting/encourage resolution, not a lie
Form: typeface & location
Ok: Swanson: 1/3rd the size, less bold/highlighted font, bottom of the sheet
Jenkins v. Union Corporation: Smaller typeface but large enough to read/noticed
CEASEDisputed Debt:(4) If the consumer notifies the debt collector in writing
within 30 days that the debt, is disputed, OR (5) request the name & address of the
original creditor (d) disputed debt the debt collector cease contact them until they
mail the verification– the debt/name or address
– BEFORE: if set in motion before, don’t have to take aff. Step to stop
○ Shimek- filed lein before
– AFTER: = violationLoigman
§ 1692b. 3rd PARTIES->Can get Location of consumer BUT can’t:
Speaker phone/answering machine
1. Identify self & state confirming location, ONLY identify self as debt collector if
2.
expressly requested
May NOT state consumer owes debt
3. More than once ONLY if requested to do so, earlier response was incorrect/
incomplete & person now has right information
4. No post card
5. No lang/symbol on any envelop or contents- indicates debt collecton
6. Attorney: once know consumer is represented & can reach attorney they can ONLY
contact them- unless fails to respond w/in a reasonable time
§ 1692c. Communication
(a)Generally: w/o consent may NOT- must know it is okay to do any of following:
(1) Time: Unusual time/place- known to be inconvient between 8-9 pm only @
consumer location
(2) Represented by attny: communicate only w/attorney unless doesn’t respond
(3) Place of employment: Consumer’s place of employment if knows or has reason
to know employer doesn’t allow such communication
(b) Communication with third parties: Not communicate w/o consent/ct
permission- only consumer, attny, reporting agency, creditor
(c) Ceasing communication: may not later communicate unless if it is to:
(1) advise that terminating efforts
(2/3) notify that debt collector/creditor may/intends to invoke ordinary specified
remedies
§ 1692d. Harassment or abuse: no intent required conduct the natural consequence
of which is to harass, oppress, or abuse any person in connection with the collection of a
debt. Not limited to:
(1) use/threat violence or other criminal means to harm physical person, reputation, or
property of any person.
(2) Obscene or profane. Abusive language
(3) Publication of a list of cons who allegedly refuse to pay debts, except to a consumer
reporting agency or to persons meeting the requirements
(4) Advert for sale of any debt to coerce payment
(5) telephone to ring/engaging in telephone conversation repeatedly w/ intent to annoy,
abuse, or harass. Bingham: called after hung up
(6) telephone calls without meaningful disclosure of the caller’s identity.
§ 1692e. False or misleading representations: may not use any false, deceptive, or
misleading representation or means in connection with the collection of any debt. Not
limited to- (Violated the following but ___ act falls under general)
(1) related to U.S/State, including the use of any badge, uniform,
(2) The false representation of—
(A) the character, amount, or legal status of any debt; or
(B) any services rendered or compensation which may be lawfully received (
(3) attorney or communication is from an attorney.
(5) Threat to take any action that cannot legally be taken or not intended to be taken.
Including that nonpayment of any debt will result in the arrest or seizure, garnishment,
or sale of any property/wages–ok if lawful and intended to be taken.
(6) false representation or implication that a sale, referral, or other transfer of any
interest in a debt shall cause the consumer to—(A) lose any claim or defense to
payment of the debt
(7) misrep C committed crime or other conduct in order to disgrace the consumer.
(8) Communicating/threatening to communicate to any person false credit
information/not saying it is disputed
(9) Written document- authorized, issued, or approved any court, official, or agency of
the US/State, or creates false impression to its source, authorization, or approval.
(10) The use of any false representation or deceptive means to collect or attempt to
collect any debt or to obtain information concerning a consumer.
(11) Failure to disclose in the initial & subsequent written/oral communication that the
debt collector is attempting to collect a debt and info obtained will be used for that
purpose
(12) have been turned over to innocent purchasers for value.
(13) Documents are legal process.
(14) not using true name of business
(15)false- documents are not legal process forms or do not require action by the
consumer.
1692F -Unfair Practices: A debt collector may not use unfair or unconscionable means
to collect or attempt to collect any debt. Not limited to:
(1) try to collect when not expressly authorized by law/agreement creating the debt
(2) 5 day post dated- must notify of deposit 10-3 days prior
(3) The solicitation of any postdated payment for the purpose of threatening/criminal
(4) Depositing or threatening to deposit any postdated check prior to date.
(5) Causing collect phone charges by concealment of the true purpose of the comm..
(6) Taking or threatening nonjudicial action to effect property if—(A) no present right
to possession of the prop & (B) no intent to take prop. (C) prop. exempt by law
(7) post card.
(8) lang/symbol on letter indicating they are a debt collector: Rutyna: return add. said
debt collector
Bankrupcy: once filed collection must stop. Bankrupcy- violate if intentionally violate
an automatic stay—higher damages.
Remedies
Civil Liability 1692: @ most $1,000 Actual dam-all allowed @ CL + punitive. Class
action- 1% net worth
Texas Federal

Who Own or third party Third party only

Harassment/abuse Intentional Natural consequences

Practies Don’t have to know Don’t have to know

Validation rd
Send only if 3 P Always send
collector

Claims Not limited

Exclusive

OTHER CLAIMS
Tie in + actual dam- health spa act, home solicitation act
CL fraud: 1.material misrep. 2false3spkr knew false/recklessly w/o knowledge of
truth&pos. asser. 4intention to be acted upon5reliance6injury
Unauthorized practice of law: send letter when not attorney. Crain
Defamation
Texas CL wrongful debt collection